The Coles Turnaround and “what our customers say about lamb”

1. The Coles Turnaroundand“what our customers say about lamb” Allister Watson General Manager Meat, Deli, Dairy June 2012

2. Australian Household Consumption & Saving (per cent of household disposable income) 95% 15% 90% 10% 85% 5% 80% 0% 75% Household Consumption (LHS) Household Saving (RHS) 70% -5% 1995 1997 1999 2001 2003 2005 2007 2009 2011 We are all facing a subdued retail environment Australian Household Wealth 900 350 (per cent of household disposable income) 800 300 700 250 600 200 500 Source: Westpac & University of Melbourne 400 Source: RBA 150 1 Household wealth – a lost decade Consumer sentiment at GFC levels 300 1 100 200 50 100 Assets (Housing + Financial) Net wealth Debt (RHS) 0 0 1997 1999 2001 2003 2005 2007 2009 2011 1995 Source: RBA Source: ABS 20-year high saving rate – no signs of abatement Lowest food inflation on record

3. 10 Strategies will deliver the circles of success

4. Regaining trust through value Fewer, deeper promotions, driving volume Multi-saves Building trust through transparency & fairness Reinventing value delivery… again Saving Coles’ customers $800m+ p.a. Savings you choose driving basket size Value meal solutions Stronger customer trust built on consistently lower prices in staples Great value fresh food, every day

5. Improved category management • End-to-end drive to improve quality, value & innovation in core food categories • Collaborative partnerships with Australian suppliers • Developing products exclusive to Coles • Product innovation • Better ranging to come for local & ethnic communities • Ethical sourcing for changing customer demands • Improving in-store delivery • Planned traineeships in bakery & meat • All Team Members to be trained to Coles improved standards Collaborative partnerships Product innovation Improving in-store delivery

6. Compelling, engaging & unique • Compelling, engaging & unique Brand Platforms • Intent on building the most famous Brand in Australia • Connecting with Australian families • Consistent Brand Platforms famous for delivering Quality, Value & Community • Consistency in Message • Fewer & bigger campaigns • Reinforcing ‘Quality food costs less at Coles’ • Cut-through & brand linkage consistently above industry norm xx% 72% 70% 73% 63% 92% 87% 81% 81% 71% Industry average / norm. Before After

7. Coles are committed to the lamb industry

8. What are customers looking for in our Lamb offer? • Lamb purchase penetration peaks with Senior Couples, lowest with Young Transitionals: need to invigorate category with younger consumers • Price-buying stronger in Supermarkets, quality seeking in butchers; supermarkets are more of a destination for Cutlets (quality important but can be expensive) • Buyers of Lamb Leg Roast more likely to buy other cuts as well; therefore roast experience may effect broader portfolio • Chops the most varied in terms of price-quality expectations, usage occasions etc

9. What are customers looking for in our Lamb offer? • Quality • Convenience • Range • Managing the impact of higher prices

10. Important factors in Fresh Lamb Cuts • Quality of Lamb is the most important factor to customers. • Quality attributes ranking as the top 3 importance factors to customers. • In particular the consistency of lamb, where customers are looking for it more in Lamb than any other Meat category. • Along with Beef, Lamb is a hero for Quality within the meat case. Q25. Still thinking about shopping for xxx in (retailer) compared to all other products you usually buy in supermarkets, how important is each statement to you when shopping for xxx in (retailer)? Source: Shopper Tracker, 2011

11. Whatare customers looking for in our Lamb offer? • CONVENIENCE • Australian customers are desperate for help in deciding what to eat and how to cook it - have limited knowledge of how to get beyond the basics, with nearly a 1/3 looking for more information on how to cook to help their meal planning & cooking • The ongoing success of the mini roast, is tapping into consumers propensity for convenient, easy meal solutions.

15. What are customers looking for in our Lamb offer? • RANGE • A Premium range is an opportunity in most cuts • Endorsement and Source region are the most opportune platforms to drive premium but not top of mind at present.

16. BUILDING THE PREMIUM/QUALITY PORTFOLIOOverall lamb purchase hierarchy Higher for Roast* Higher for Other Cuts* Total Sample N=900, * See Appendix

17. What are customers looking for in our Lamb offer? • MANAGING THE IMPACT OF HIGHER PRICES • Shoppers preference for ‘Saving me money’ rates higher than quality and on a par with Chicken, impacting Lamb by its higher prices in recent times. • The type of value relates more to individual circumstance than occasion. • Bundling (price, size, weight, quality) is a key consumer need when it comes to lamb purchase - Bundling expectations vary significantly by lamb cut and the portfolio should reflect this.

18. Our ongoing priority is to provide simplicity for our customers • Best instore availability in Australia • Give better value to our customers • Simplified, lower cost supply chains • More choice and innovation, less duplication